Indirect Tax Update VAT exemption for goods & services Indirect Tax Update VAT exemption for goods & services

Date: 16 April 2021

On 12 April 2021, the European Commission proposed to exempt from VAT goods and services made available by the European Commission, EU bodies and agencies to Member States and citizens during the coronavirus (COVID-19) pandemic.

Once in place, the new measures will allow the Commission and other EU agencies and bodies to import and purchase goods and services VAT-free when those purchases are being distributed during an emergency response in the EU. The recipients might be Member States or third parties, such as national authorities or institutions (for example, a hospital, a national health or disaster response authority). Goods and services covered under the proposed exemption include, for instance:

• diagnostic tests and testing materials, and laboratory equipment
• personal protective equipment (PPE) like gloves, respirators, masks, gowns, disinfection products and equipment
• tents, camp beds, clothing and food
• search and rescue equipment, sandbags, life jackets and inflatable boats
• antimicrobials and antibiotics, chemical threat antidotes, treatments for radiation injury, antitoxins, iodine tablets
• blood products or antibodies
• radiation measuring devices
• development, production and procurement of necessary products, research and innovation activities, strategic stockpiling of products; pharmaceutical licenses, quarantine facilities, clinical trials, disinfection of premises, etc.

According to an EC release, the legislative proposal, which will amend the VAT directive, will now be submitted to the European Parliament for its opinion, and to the Council for adoption.

Member States shall adopt and publish, by 30 April 2021 the laws, regulations and administrative provisions necessary to comply with this Directive. They shall apply those measures from 1 January 2021.

How can KPMG assist?

Should you like to further discuss the content and potential impact of the Circular to your business, please contact one of our trusted advisors from the Indirect Tax Department at KPMG Cyprus.

KPMG’s Indirect Tax team provides advice and assistance at the Cyprus and international level. We structure our effort to dovetail with your business issues and strategy. Our focus is on supplying value adding and pragmatic advice rather than just a list of recommendations.

Our tax professionals are able to review your company’s current tax position and provide relevant advice and planning on a range of indirect taxes, including VAT, customs duties and excise taxes (such as tax audits, reorganizations and acquisitions, etc.). Furthermore, we can help your company with its administrative obligations and contacts with administrative bodies.